INCOME TAX OFFICER, JODHPUR versus PURUSHOTTAM DAS BANGUR AND ANR.

Citation: [1997] 1 S.C.R. 480 · Decided: 22-01-1997 · Supreme Court of India · Bench: S.C. AGRAWAL, G.T. NANAVATI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
B 
INCOME TAX OFFICER, JODHPUR 
v. 
PURUSHOTTAl\.f DAS BANGUR AND ANR. 
JANUARY 22, 1997 
[S.C. AGRAWAL AND G.T. NANAVATI, JJ.) 
Income Tax Act, 1961- S.147 (b)-Reassessment-Notice for reassess-
ment by the Income Tax Officer to the assessee, on the basis of definite 
C inf onnation received by him, that some income of the assessee escaped as- -
~essment-Held: the Income Tax Officer could issue notice under Section 
147(b) on the basis of definite infomwtion received by him-Notice sent by 
Income Tax Officer, the next day of receiving infomiation-Held, could not 
be construed as non-applicali'on of mind by the Income Tax Officer to the 
inf onnation received. 
D 
Wealth Tax Act, 1957--Sec. 17-Notice of reassessment issued under 
Section 17 on the basis of s11bseq11ent definite infonnation-Held: Valid. 
The Income Tax Offic:er completed the assessment for the assess· 
ment years 1969-70 and 1971-72 accepting the respondent- asses sees' claim 
E that they had suffered long-term capital loss on sale of shares of a 
particular company. Subsequently, the Income Tax Officer received a letter 
from the Deputy Director, Directorate of Inspection (Investigation), Spe· 
cial Cell, New Delhi with definite information supported with documentary 
proof that the fair market value of the share was higher than the sale price 
F 
and the so-called market quiotations shown by the assessees at the time of 
the original assessment we1re manipulated ones, as a result of which the 
income chargeable to tax had escaped assessment. The Income Tax Officer 
issued notices to the re~pondents under Section 147(b) of the Income Tax 
Act, 1961 informing the assessee that having reason to believe that their 
G income chargeable to tax for assessment years 1969-70 and 1971-72 had 
escaped assessment, he proposed to reassess their income for those years. 
Notices under Section 17 of the Wealth Tax Act, 1957 were also issued to 
the assessees for the same reasons. The assessees filed writ petitions 
challenging the notices. The High Court quashed the notices holding that 
the Income Tax Officer had no reasons to reassess the assessees. Ag-
H grieved, the Revenue filed the present appeals. 
480 
I.T.O. v. P.D. BANGUR 
481 
Allowing the appeals, this Court 
Held: 1. On the basis of the information contained in the Deputy 
Director's letter and the documents annexed to the same, the Income Tax 
. 
Officer could have had reason to believe that the fair market value of the 
shares was for more than the sale price and the market quotations from 
Calcutta Stock Association shown by the assessee at the time of the 
Original assessment were manipulated ones and as a result income char-
geable to tax had escaped assessment. It could not be said that the infor-
mation that was contained in the said letter was not definite information 
and that the said letter could not be acted upon by the Income Tax Officer 
for taking action under Section 147 (b) of the Income Tax Act, 1961. 
[488-A-B] 
2. Merely because the impugned notice was sent on the next day after 
receipt of the letter of the Deputy Director, it could not be inferred that the 
Income Tax Officer did not apply his mind to the information contained in 
A 
B 
c 
the said letter. On the basis of the said facts and information contained in D 
the letter, the Income Tax Officer, without any further investigation, could 
have formed the opinion that there was reason to believe that the income 
of the assessee chargeable to tax had escaped assessment. [ 488-D-E] 
3. For the same reasons the judgment of the High Court quashing the 
notices issued to the respondent assessees under Section 17 of the Wealth E 
Tax Act, also can not be upheld and is set aside. [ 489-B] 
Purshottom Das Bangur v. Income Tax Officer, (1980) 126 ITR 580, 
reversed. 
j 
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3041-43 F 
of 1983 Etc. 
From the Judgment and Order dated 26.11.79 of the Rajasthan High 
Court in D.B.C.W.P. No. 1177, 1182/74 and 57 of 1975. 
Harish Chandra, B.S. Ahuja and B.K. Prasad for the Appellant. 
G 
Ms. Gauri Rastogi for the Respondents. 
The .T udgment of the Court was delivered : 
CIVIL APPEALS NOS. 3041-43 OF 1983. 
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482 
SUPREME COURT REPORTS 
[1997] 1 S.C.R. 
These appeals are directed against the judgment of the Rajasthan 
High Court dated November 29, 1979, whereby the Writ Petitions filed' by 
the respondents have been allowed and the notices issued under Section 
147(b) of the Income Tax Ac
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